Exxon wants brakes put on state's use of MtBE settlement for anything but cleanup

By DAVE SOLOMONNew Hampshire Union LeaderOctober 08. 2013 10:23PMCONCORD — Lawyers for ExxonMobil are appealing a $236 million verdict handed down by a Superior Court jury in April after a three-month trial over groundwater contamination caused by the gasoline additive MTBE, which has been banned in New Hampshire since 2007.

Whether the energy giant will ever have to pay that money to the state remains to be seen as the appeal winds its way through the state Supreme Court and possibly beyond. But if the money is paid, it should be placed in a court-supervised trust to ensure that it’s used to pay for cleanup, and not to help balance the state budget, according to ExxonMobil lawyers.

The state is fighting the effort to set up such a trust, and on Sept. 19 asked Superior Court Judge Peter Fauver to reconsider a Sept. 9 order that gives ExxonMobil some of what it asked for. The order required that approximately $195 million of the damage award be held in a supervised trust dedicated to MTBE cleanup, with the remaining $41 million unencumbered.

During the trial, believed to be the longest in New Hampshire history, the state argued that MTBE was present in more than 9 percent of private wells throughout the state, and that remediation would take up to 20 years, costing hundreds of millions of dollars.

Lawyers for the state maintain the jury award will be used for cleanup, but ExxonMobil, as the losing defendant, has no business dictating the terms. “Why should Exxon have any standing to help create a trust or say how that trust is used?” asked Senior Assistant Attorney General Allen Brooks, chief of the environmental protection bureau.

Brooks argues that the state Legislature has the right to manage settlements in a way that benefits all New Hampshire citizens.

“You don’t want to limit their flexibility,” he said, “because they may face some situations in the future that we didn’t anticipate. There is no doubt that MTBE is going to be cleaned up. It’s only a question of how much flexibility the state is going to have.”

ExxonMobil attorneys claim the state’s appeal belies the original intent of the lawsuit.

“Can there be any doubt as to why the state did not tell the jury that it actually intended to convert any award for future testing and remediation into a contribution by ExxonMobil to New Hampshire’s general budget,” they wrote.

There’s nothing inherently wrong with that outcome, said Brooks.

“Unlike private corporations, money that goes into the general fund doesn’t go to pay a CEO bonus; it all goes to the public benefit and public programs,” he said. “It’s not a black hole. It’s a source of all the public services in New Hampshire.”

In his order on ExxonMobil’s request for the trust to be established, Judge Fauver agrees with the company that a trust should be created, but not necessarily supervised by the court.

“The state must ensure it has adequate resources to test and treat new Hampshire’s waters in the future,” he wrote. “Thus the court agrees with Exxon’s first argument — that a trust is necessary to protect the (result) of the jury award — but only to a limited extent.”

He instructed the state to prepare a proposal for how a trust could function and whether it should be independently supervised or court-monitored.

In making its case, ExxonMobil cites the fact that the state is now using $21 million from a national settlement reached with tobacco companies and $9 million in previous MTBE settlements to help create the current state budget surplus, and has invested little in tobacco education.

“I know it’s been a popular statement to say tobacco funds have been misdirected,” said Brooks, “but I don’t have any evidence of that. More of it should be used for tobacco-related education, but there’s nothing in those settlements that restricted the use of the money in ways the state did not live up to. I think it’s a robust policy debate about how that settlement money was used.”